E-commerce fraud: Whopping nearly 500% jump in online shopping fraud cases in just 3 years

Ahead of the expected launch of the highly anticipated e-commerce policy in the current financial year that takes into account the issue of fraudulent practices in online shopping, the number of fraud cases in the e-commerce sector has increased by a whopping 475 per cent between August 2016 and November 2019, according to the government data. E-commerce in India is dominated by Walmart-owned Flipkart and Amazon, and Snapdeal primarily. From 977 cases reported during the seven-month period of FY17 to 2,441 during FY18 and 4,955 in FY19, the number has risen to 5,620 cases till November in the current financial year. The cases were registered under the e-commerce platform of the National Consumer Helpline. The increase during the said periods has been 149 per cent, 102 per cent, and 13 per cent.

The Consumer Protection Act, 1986 covers all goods and services and all mode of transactions including e-commerce, said a statement by the Commerce ministry citing Piyush Goyal sharing information in Lok Sabha on Wednesday. Under the provision of the said Act, a three-tier quasi-judicial mechanism, called Consumer Fora, where a consumer can file a complaint against any unfair trade practices including those on e-commerce is provided, according to Goyal.

“While Flipkart has put in place stringent measures to ensure your account credentials remain safe and secure, it is equally your responsibility to ensure that you take precautions to keep your account safe from fraudsters,” the company cautioned customers in a blog post last year adding that “Flipkart takes information security seriously and initiates necessary actions on a continual basis.”

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However, the minister didn’t specify the type of frauds reported in the number cases whether with respect to credit card fraud, phishing, identity fraud, fake products/offers or perhaps something from the merchant end etc. E-commerce businesses in India due to the “cross-cutting nature of e-commerce, different laws and regulations across sectors govern the present e-commerce activities,” the ministry said in another statement. The plethora of laws includes Income Tax Act, 1961, Information Technology Act, 2000, Foreign Exchange Management Act, 2000, Payment and Settlement Systems Act 2007, Companies Act, 2013 and laws related to Goods and Services Tax apart from the Consumer Protection Act, 1986.